Bitcoin is a peer-to-peer payment system and digital currency which uses cryptography to control the creation and transfer of money. If you still haven’t read up much about Bitcoin, here’s an excellent article titled “Explain Bitcoin Like I’m Five“ that helps you figure out the concept behind it.

While there has been much chatter about the pros and cons of the new open source digital currency, especially following the news of the bankrupcty of Mt Gox, the world largest bitcoin exchange, that did not stop Singapore based Tembusu Terminals from setting up the nation’s first Bitcoin ATM machine. With the ATM, Singaporeans will soon be able to swop their physical dollars for virtual bitcoin.

The ATM was installed at The Spiffy Dapper, a bar in the Boat Quay district. Other than The Spiffy Dapper, the company is also talking with other retailers that accept the virtual currency to set up its ATMs on their premises. The Bitcoin ATM is also installed at CityLink Mall, and drew a huge queue when it launched last week.

Image credit: Tomas Forgac

To convert cash into bitcoin on the ATM, users have to scan a QR code from an easily downloadable bitcoin wallet on their smartphones. They can then feed bills into the machine, which will credit the digital equivalent into their bitcoin wallets. The US$5,000 (S$6,380) ATM, according to Lamassu’s website, can convert “fiat to bitcoin in 15 seconds”.

The announcement comes six days after Singapore’s finance minister said the central bank didn’t recognize Bitcoin as legal tender and had cautioned individuals about the use of virtual currencies.

“MAS currently does not regulate Bitcoins. They are not legal tender like the notes and coins issued by MAS. They are also not considered securities under the Securities and Futures Act,” said Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister in charge of MAS.

He added, “But Bitcoins are not without risk. MAS has published a consumer alert2 to warn Singaporeans about these risks. Unlike legal tender such as the Singapore Dollar, which is issued and backed by the Government, there is no legal obligation for individuals or businesses to accept virtual currencies. Virtual currencies like Bitcoin are typically not backed by an identifiable organisation. As a result, should the virtual currency cease to be accepted or the scheme cease to operate, users may not be able obtain a refund of their monies.”

While the government did not interfere with any bitcoin transactions in Singapore, neighbouring countries such as Thailand and Vietnam has seen the governments issue bans on the usage of the digital currency.

If you’d like to get yourself some of the digital currency, you can check out the Bitcoin ATM machines in The Spiffy Dapper and Citylink Mall before the government decides to remove it.